Goodyear to launch online tire buying, installer program Program details

GRAPEVINE, TexasGoodyear plans to start selling tires directly to consumers via the Web, becoming the first tire manufacturer in the U.S. to do so, the company told dealers attending the recent 2015 Dealer Conference in Grapevine.

The Akron-based tire maker stressed that the online purchasing option, to run through its Goodyear.com site, will direct customers to their nearest authorized Goodyear retailer for installation. Mike Dauberman, Goodyear's senior director, marketing and interactive, called the installation program the richest compensation package in the industry for retail tire dealers.

Both Goodyear's e-commerce option and installer program are set to launch sometime in the second quarter, he said, adding that more than 1,000 dealers already have committed to take part in the gradual U.S.-only rollout of the program.

We're technically ready to go, but we have a lot of policies we have getting the dealers on board, he said. There's a lot of work that needs to happen before we can actually flip the switch.

For Goodyear, the program is about one thingproviding convenience for all consumers, including a growing segment of people who are demanding the ability to buy tires online.

In deciding to offer online ordering, Goodyear cited research that shows consumers are increasingly shopping and buying tires online. A recent Millward Brown Digital-Google Auto Tires Purchase Study estimated that 83 percent of tire shoppers used digital sources as a part of their purchase processup from 66 percent in just two years.

Last year alone, Goodyear said more than 20 million consumers visited Goodyear.com to research and shop for tires.

The company also is hoping the program will help its dealer base form relationships with new customers.

The work here is that we've partnered up with the retailers, we've partnered up with the wholesale distributors to be able to offer this product, he said. Where we really feel we have a good position in the marketplace is that we're really focused on the entire consumer experience.

So we're not just focused on selling tires online. We're focused on how we get the best distribution, how we can sell to consumers through Goodyear.com, but then how we can really engage our retail base to have them embrace the program, to have them gain new customers from the program.

In an e-commerce test the tire maker performed in 2012where it allowed consumers to purchase tires directly from its websiteGoodyear found that 60 percent of consumers who ended up in a retail dealership for installation were new to those dealers' databases. Approximately 38 percent of those consumers have since gone back to those stores for follow-up services.

That consumer who says, 'I love to buy stuff online, I feel more comfortable buying online' is not likely to change their buying behavior in the future, but what they are very likely to do is to build a relationship with that store and start to go to that store for things that they can't do online, Mr. Dauberman said.

While on the outside it may appear Good-year is poaching potential customers from its dealers, Mr. Dauberman said the company's research shows retailers already are losing out on these online sales.

We believe that the consumers that are coming to Goodyear.com and are demanding the ability to buy online are leaving Good-year.com and they're going to other online resellersother online resellers that are not necessarily giving the ability for a TSN (Tire & Service Network) location to play, and so we are trying to capture that consumer on Goodyear.com and trying to drive that consumer to these stores, he said.

According to Mr. Dauberman, there is a very small percentage of consumers buying tires onlineestimated in the range of 6 percentand it's typically a person who is demanding it.

They're not going to Goodyear.com and saying, 'Oh, I can't buy online. I really want to. Oh well, I'll do it this traditional way,' he said. They're going to Google, they're doing a search and they're ending up on another site that you can do it.

Sometimes on those sites a Goodyear retailer receives the installation, and sometimes if they bought from a company like a Wal-Mart, they're not involved in the transaction at all. We really believe this is a play to try to allow Goodyear retailers to still have a stake in online tire sales.

Still, some dealers aren't thrilled about it.

Ken Sylvester, president of Philadelphia-based United Tire & Service, said all 17 of his company's stores push Goodyear as their primary brand. He told Tire Business he and many of his industry peers are taking a wait-and-see attitude toward Goodyear's new program.

I think there's a lot of sentiment that we have resistance to it because we feel like (Goodyear's) coming between us and our customer, but on the other side we also feel like we have a gun to our head where, if we don't do this program, there's another dealer down the street that will, he said.

...One side of me says that even though I'm not sure I like the program, I want to be part of it because I want to be able to track who comes into our stores and have the statistics to tell who was my customer and who wasn't. If they bring six new customers a day, how can you say no to that?

Mr. Sylvester said he believes part of the reason behind Goodyear's move to online sales is that many of its dealers aren't 100-percent focused on the Goodyear brand anymore.

Now they're trying to guarantee that the result comes through on the website, he said. They're literally dropping the tire in your lap and saying you have to put this tire on.

In spite of his hesitations, Mr. Sylvester said he plans to take part in the program.

If Goodyear is correct in their observations, then I think we have to change with the times and hopefully get a customer or a sale that we wouldn't get normally, he said. So we're going to support Goodyear on it.

Mr. Sylvester said United Tire also is planning to add a shopping cart to its own website and process credit card information online.

We're going to do just what Goodyear's doing. We're going to mirror it, he said. If a customer comes across from Goodyear's website to our website, he's going to get a price and be able to buy online and then come into our store and get it installed.

We're not trying to stop consumers from buying through traditional means, he said. In fact, the majority of our efforts, our marketing (and) our sales activities are still to try to drive consumers to those retail outlets and buy the tires from those retail outlets.

We know that it's not only a subset of people who buy online, but it's a subset of those who buy online directly from a manufacturer, he continued. So even if it's 6 percent, we don't think it's 6 percent for us.

Mr. Dauberman said dealers participating in the installer program would be compensated in the same fashion as they would for participating in the tire maker's national accounts and government accounts programs.

Consumers who use the e-commerce option will pay Goodyear for the tires, taxes and standard installation online. The dealer selected to install the tires will receive 100 percent of the amount charged for installation along with a pass through for disposal fees, where they exist. In addition, the dealer will be paid a delivery commission for handling the sale, according to the company.

Commission amounts will not vary based on tire model, but will based on tire size, Mr. Dauberman said, with light truck tires generating more income for dealers than those on a typical passenger car.

We're selling an installation package that will be inclusive of all the services that we believe are necessary for that tire install, he said. We've learned a lot on how to do that through the national account and government programs. It will not include everything, so if a TPMS monitor is bad, if they have to do above and beyond standard installation, those fees will be clarified on the website to the consumer.

He noted that Goodyear's expectation is that the vast majority of transactions will not require additional services.

All U.S. Goodyear retailers have the option to become authorized installers under the program.

Participating installers will appear purely in order of proximity to the consumer making the purchase, as opposed to Goodyear.com's dealer search function, which disproportionately drives consumers to TSN stores. However, Mr. Dauberman said Goodyear will soon add a ratings/reviews function to the website so that consumers can choose installers based on rating.

We believe that the dealers who pay attention to those ratings and reviews and really try to push that positive experience will win, because we know...that consumers will go out of their waynot far out of their way, but they will go out of their wayto do business with a store that's highly regarded, he said.

Additionally, logistics will be handled by Goodyear with participating wholesale distributors.

Goodyear has not yet finalized its e-commerce pricing policy, but Mr. Dauberman insisted the company will not undercut its dealers.

People don't go to the manufacturer websites to get a discount, Mr. Dauberman said. They go to manufacturer websites because some people like the transparency, the convenience of doing it. Our pricing model will be about the convenience to the consumer.

But price remains one of the biggest sticking points for Goodyear dealers.

I know Goodyear is looking for a different consumer, but I don't want (customers) to think that if they buy at a certain price that they're going to have buyer's remorse down the line, start shopping around and find they paid too much for the tire, Mr. Sylvester said. How does that make the installing dealer look? They're going to put reviews on the site. We're going to be a direct reflection of the sale that Goodyear created.

Retailers interested in the Goodyear.com installer program can contact their Goodyear sales representative for more details, including the opportunity to sign up to participate as an authorized installer, the company said. Full training, including eLearning, a comprehensive resource guide, videos and call center support will be available to all participating installers in the coming months.

Goodyear is not limiting the number of dealers who can sign up as program installers and doesn't have a goal number in mind, according to Mr. Dauberman.

2015 is a learning year for us, he said. We really need to get an understanding of what's important to the consumer, what's the distance that a consumer is willing to drive, how important it is for the consumer to go to work with a dealer that they have a past relationship withthat's all learning because this is new. We don't know if we have enough (installers), and we don't know if it's 3,000.

Mr. Dauberman said as consumer buying habits evolve, other manufacturers will also introduce e-commerce options.

Fast forwarding, we believe that this is the way people are going to buy tires, that every retailer in this building is going to have some form of functionality and it's no longer gonna be, 'Well, what about TireBuyer, or Tire Rack or Goodyear.com?' It's going to be, 'What about the consumer that buys tires online?' and it's going to be a problem for everybody.

We're ahead of the game right now, he continued. We're proud to be the first manufacturer to do thisit's ahead of the game todaybut it won't be forever. This is going to be a very standard way to do business.

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